23 December 2012

Incorporating the Rentier Sectors into a Financial Model | Michael Hudson: Current macroeconomics ignores the roles that rent, debt and the financial sector play in shaping our economy. We discuss the Classical view on rents and policy responses to the rentier sector in the 19th century. The finance, insurance & real estate sector is today’s incarnation of the rentier sector. This paper shows how financial flows can be conceptually and statistically studied separately from (but interacting with) the real sector. We discuss finance’s interaction with government and with the international economy.

02 December 2012

Americans like to portray themselves as moral and fair and their nation as a place where justice and the rule of law prevails. But abroad American corporations have operated as colonial powers. As have ours in Europe. Global corporations, American and European, operating in poorer nations especially, expect to buy those whose compliance they need and simply ignore laws they don’t like. Expensive lawyers can tie up any objections in pointless and endless legal battles for a fraction of the benefits that came from breaking the law. They have become used to being above the law. The US citizen, especially I think, has been either largely ignorant, thanks to the best efforts of the US media to keep them that way, or has just not cared.

When BP polluted the Gulf Coast of The USA there was widespread outrage at BP’s corporate arrogance and guilt. And quite right too. BP deserved everything thrown at it and more. But where was the outrage and press campaign over Conoco? Or for that matter over Union Carbide in Bhopal. Thousands died in Bhopal and the US response, governmental as well as corporate, was to fly the Union Carbide chief out of the country and stonewall all enquiries.

09 November 2012

Thunderbolts, Mammoths and Mass Destruction According to the Lakota people “The creator sung the song of destruction and sent down huge thunderbirds to wage war against the giant animals and evil humans. Finally at the height of the battle the thunderbirds threw down their most powerful thunderbolts all at once. The fiery blast shook the entire world, toppling mountain ranges and setting forests and prairies ablaze. The giant animals and evil people burned up where they stood. He then sent down rain and a great quake that split open the world sending great torrents of water across the world. Today are found the bleached bones of the great animals buried in mud and rock all over the world.”

05 October 2012

Focusing on Fusion : The stars receive their power from outside, not inside. Any nuclear reactions are taking place on the surface of the Sun and not in its core. The solar wind is an electric current connecting the Sun with its family of planets and with its galactic clan, so the 90-year-old theory of fusion firing the solar furnace needs to be reexamined.

This discovery of the electrical nature of supernovae has implications back here on Earth. The extensive interdisciplinary scope of the Electric Universe model is highlighted by Peratt’s recent discovery that objects from antiquity manifest 56- and 28-fold symmetry. These range from concentric petroglyphs around the world to geoglyphs (stone-rings), megaliths, and other constructs. The most renowned of the 56-fold symmetric megaliths is Stonehenge.

22 September 2012

And the War Came - Ralph Raico - Mises DailyThere is no evidence whatsoever that Germany in 1914 deliberately unleashed a European war which it had been preparing for years — no evidence in the diplomatic and internal political documents, in the military planning, in the activities of the intelligence agencies, or in the relations between the German and Austrian General Staffs

21 September 2012

According to an NSA whistleblower the US government is using tools developed for international spying against its own citizens - to create profiles and timelines of every citizen and community. This is a capability that the KGB, STASI & the Gestapo would have loved to have.

26 July 2012

Why Listen To Keynes In The First Place? Sum up Keynes:arrogant; sadistic; power-besotted bully; deliberate and systemic liar; intellectually irresponsible; an opponent of principle; in favor of short term hedonism and nihilistic opponent of bourgeoisie morality…; hater of thrift and savings; somebody who wanted to liquidate the creditor class…exterminate the creditor class; an imperialist and anti-Semite; and a fascist. Outside of that I guess he was a great guy!

17 July 2012

The Case for Sanskrit as India’s National LanguageIn colonial India, the education system was de-Sanskritized and replaced by an English based education. This served to train clerks and low level employees to administer the Empire, and to start the process of self-denigration among Indians, a trend that continues today. Many prominent Indians achieved fame and success as middlemen serving the Empire, and Gandhi's famous 1908 monograph, “Hind Swaraj,” discusses this phenomenon.

07 July 2012

Charles C. Mann, 1491: Before it became the New World, the Western Hemisphere was vastly more populous and sophisticated than has been thought—an altogether more salubrious place to live at the time than, say, Europe. New evidence of both the extent of the population and its agricultural advancement leads to a remarkable conjecture: the Amazon rain forest may be largely a human artifact

23 May 2012

JPMorgan’s Addiction to Gambling on Derivatives | The Big Picture: The reality is that Dimon is running the largest hedge fund in the world and that, in economic substance, he is gambling with our (federally-guaranteed) money on huge positions in financial derivatives. If he continues these bets, it is only a question of time before JPMorgan suffers catastrophic losses and we have to bail out the bank’s creditors. True conservatives support the Volcker rule because they agree that we should not be subsidizing a government sponsored entity (GSE) like Fannie, Freddie, or JPMorgan, to bet on financial derivatives.

19 May 2012

An Attack on Paul Krugman | Steve Keen's Debtwatch: Economics pretends to be mathematics, but it is not mathematics. There is a major difference. No mathematician uses a term in a formula, or a statement of a theorem, unless that term has first been defined with excruciating precision. Hence, there is no question of what the term means, let alone any debate that is carried on only because two disputants have different concepts of the meaning of their terms. As a result, a very simple proof of something will invariably persuade the other side. The cost of this, however, is that mathematics is strictly limited in what it can define and prove.

In economics, it is completely different. Terms are used in formulas without ever having been precisely defined. Economists may think they’ve defined them, but they should try reading some real mathematics to see what a precise definition truly is. The economists, I think, leave the work of definition to be inferred from the way the terms are used in the formulas. This, to me, is weird – but I suppose it could work, and it does work sometimes, but more often it leads to ridiculous debates that leave matters of real importance unexamined.

16 May 2012

There is a great irony in this concentration of power in the State: the Power is concentrated in the State to protect the citizenry from predation and exploitation, but that concentration becomes an irresistible attractor for all those seeking to increase their private gain via monopoly, cartels, collusion, fraud, and other forms of predation.

There are no State-based limits on the State’s concentration of wealth and power.

Private wealth is not limited or self-regulated, and so private concentrations of wealth inevitably exceed the ethical threshold of individuals within the State (i.e., their resistance to bribes and self-interest). This leaves the State intrinsically vulnerable to the influence of private wealth. Once private wealth has a foothold of influence within the State, it can then bypass the State’s internal controls and become the financial equivalent of cancer: a blindly self-interested organism bent solely on growth at the expense of the system as a whole.

Rather than protect the citizens from exploitation, the State’s primary role becomes protecting the private gains of elites who have taken effective control of the State’s vast powers.

14 May 2012

Fugitive hacker Christopher Doyon, or Commander X, tells why Anonymous ‘might well be the most powerful organization on Earth’ | News | National Post: “Information terrorist” – what a funny concept. That you could terrorize someone with information. But who’s terrorized? Is it the common people reading the newspaper and learning what their government is doing in their name? They’re not terrorized – they’re perfectly satisfied with that situation. It’s the people trying to hide these secrets, who are trying to hide these crimes. The funny thing is every email database that I’ve ever been a part of stealing, from Pres. Assad to Stratfor security, every email database, every single one has had crimes in it. Not one time that I’ve broken into a corporation or a government, and found their emails and thought, “Oh my God, these people are perfectly innocent people, I made a mistake.”

11 May 2012

Liberal ideas led to our prosperity - equality, economic liberty, respect for private property and the rule of law. As the 99 and 1 battle for absolute control, statist assault by both, the left and the right is slowly but surely overturning the source for their own empowerment.

10 May 2012

[In 2008] the banking system, especially the mainstream banking system, was not in peril at all. The toxic securitized mortgage assets were not in the Main Street banks and savings and loans; these institutions owned mostly prime quality whole loans and could have bled down the modest bad debt they did have over time from enhanced loan loss reserves.So the run on money was not at the retail teller window; it was in the canyons of Wall Street.

The run was on investment banks that were really hedge funds in financial drag. The Goldmans and Morgan Stanleys did not really need trillion-dollar balance sheets to do mergers and acquisitions. Mergers and acquisitions do not require capital; they require a good Rolodex. They also did not need all that capital for the other part of investment banking—the underwriting business. Regulated stocks and bonds get underwritten through rigged cartels—they almost never under-price and really don't need much capital. Their trillion dollar balance sheets, therefore, were just massive trading operations—whether they called it customer accommodation or proprietary is a distinction without a difference—which were funded on 30 to 1 leverage. Much of the debt was unstable hot money from the wholesale and repo market and that was the rub—the source of the panic.

02 May 2012

The new political reality is "warehousing". It captures what's going on better than apartheid. Warehousing is permanent. Apartheid recognises that there are human beings with limited rights, but we do not want to engage with them. With warehousing it's like prisons. There is no other side. There is us, and then there are these people that we control, they have no rights, they have no identity, they're inmates. It's not political, it's permanent, static. Apartheid you can resist. With warehousing, you can't resist because you're a prisoner. Prisoners can rise in the prison yards but prison guards have all the rights in the world to put them down. That's what Israel has come to. They are terrorists and we have the right to put them down. It is now solely an issue of security, just like in prisons. It is a new concept that does not have any legal reference today but we'd like to put that in because warehousing is not only in Israel. Warehousing exists all over the capitalist world. That's why I am writing about Global Palestine. I'm saying that Palestine is a microcosm of what's happening around the world.

Both Krugman and Bernanke are economic failures. [Krugman's] idea that more inflation will help those mired in debt is preposterous. Japan attempted to halt deflation for 20 years and has nothing to show for it but a mountain of debt.

On the other hand, Bernanke brags about "30 years building up credibility" that the Fed simply does not have. The US has seen bubble after bubble, each with increasing amplitude and troughs, so Bernanke has to be on some sort of mind-altering drugs to talk of either credibility or price stability.

22 April 2012

Caste System: Its’ Life & Birth: When the British tried suppressing people, between Buxar (1765) to Indian Independence (1947), more than 200 revolts, wars, battles, bombings, terrorist plots were executed. The British needed a highly paid army of more than 10 lakh soldiers to suppress the Indian population.

Now these are numbers. Where is any source about Brahmin wealth, Brahmin armies, required to suppress people?

British who had "No Indians Allowed" signboards in many places promoted themselves as liberators. Probably, people also need to see Europe to understand what is the real caste system really is.

In Protestant Britain, there are hardly any Catholics. Protestant Germany has a few more than Britain Catholics. Now Britain and Germany were both Catholic countries 500 years ago. In Protestant USA, there has been only one Catholic President in more than 200 years. There is hardly any Protestant population in France of Italy.

To repeat a point – If Brahmins have been in power for 1200 years, and established the caste-system, why have Muslim, British and now Secular rulers not been able to remove it in the last 1200 years.

19 April 2012

Britain destroyed records of colonial crimes | The Raw Story: Thousands of documents detailing some of the most shameful acts and crimes committed during the final years of the British empire were systematically destroyed to prevent them falling into the hands of post-independence governments, an official review has concluded.

Those papers that survived the purge were flown discreetly to Britain where they were hidden for 50 years in a secret Foreign Office archive, beyond the reach of historians and members of the public, and in breach of legal obligations for them to be transferred into the public domain.

18 April 2012

Sociopathy Is Running the US – Part Two | Doug Casey | Safehaven.com: I would like to suggest that what really distinguishes political elites from normal people is not just a predilection for stupidity but a real capacity for evil. Evil might best be defined as the intentional and usually gratuitous commission of acts that are cruel or unjust. A person who commits many evil acts is a sociopath. The sociopaths who are naturally drawn to government eventually come to dominate it. They're very dangerous people. They reset the social mores of the country they control. After a certain point, a critical mass is reached, and it's GAME OVER. I suspect we're approaching that point.

English peasants didn’t want to give up their rural communal lifestyle, leave their land and go work for below-subsistence wages in shitty, dangerous factories being set up by a new, rich class of landowning capitalists. A factory-peasant would have to toil for more than three days to buy a pair of commercially produced shoes. Or they could make their own traditional brogues using their own leather in a matter of hours. Capitalists needed a pool of cheap, surplus labor. Faced with a peasantry that didn’t feel like playing the role of slave, philosophers, economists, politicians, moralists and leading business figures began advocating for government action. Over time, they enacted a series of laws and measures designed to push peasants out of the old and into the new by destroying their traditional means of self-support.

15 April 2012

BBC NEWS: Abdel Hakim Belhaj, the leader of the Libyan Islamic Fighting Group (LIFG) that was opposed to the Libyan dictator was kidnapped by the MI6 and delivered to Muammar Gaddhafi. This was the price Tony Balir paid for his bizzare "hug-in" with the Libyan dictator in March 2004. The media circus, with an audience of 60 British reporters, was designed to mark Gaddafi's rejection of his terrorist past and renunciation of his chemical arsenal and weapons of mass destruction. Gaddafi was now hailed as Britain and America's ally in the so-called war on terror.

10 January 2012

The celebrated lecturer Richard Feynman noted, “If the sun is exploding ‘right now’, it takes eight minutes before we know about it, and it cannot possibly affect us before then.” His reason for this is the doctrine that the fastest “message” that travels between the Sun and the Earth does so at 3x 10^8 (three hundred million) meters per second, the speed of light through space. At that light speed the Sun viewed from the Earth appears to be where it actually was some eight minutes ago, and not where it actually is when it is being viewed. However, if the Sun by its gravitational pull is causing the Earth to maintain an orbit around it, the pull of the Sun on the Earth has to be from almost exactly where it is, and not from where it was eight minutes beforehand. If the pull of the Sun upon the Earth came from an eight minutes back position behind the Sun, the Earth (as well as all the other planets) would be slung out of orbit in short order and no solar system of planets could be maintained. It follows that there is a much faster messenger than light, namely gravity, that travels between the Sun and the Earth at a speed that makes the transmission of light seem like a dawdle.

We don’t need any experiment with neutrinos, therefore, to tell us that something can travel faster than light. We just have to take into account all the observations from which we infer that the Earth and the other planets have been moving round the Sun in a stable orbit for an extended period of time. This requires the gravitational “message” to be sent from the Sun and received by the Earth, as well as other planets, almost instantaneously. Therefore Einstein’s special theory of relativity should have been repealed long ago, even aborted.

07 January 2012

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising them the most benefits from the public treasury, with the result that a democracy always collapses over a loss of fiscal responsibility, always followed by a dictatorship. The average of the world's great civilizations before they decline has been 200 years. These nations have progressed in this sequence:

13 November 2011

German opposition to the ECB financing government deficits remains resolute. As long as this remains the case, the value of the Euro will remain preserved. In addition to the EMU prohibitions on financing government deficits, the German Constitutional Court too has stipulated that this remains a key condition for Germany to remain in the Eurozone.

For irresponsible governments and over-levereaged banks, this is a big headache. However, for the common savers, industrialists and the people of Europe, a stable currency is an unmitigated blessing. It is something they have not seen for many centuries. Kings and governments have always used currency debasement and printing to finance their grandiose ambitions and bloody wars.

European Central Bank council member Jens Weidmann said the ECB cannot bail out governments by printing money. 'One of the severest forms of monetary policy being roped in for fiscal purposes is monetary financing, in colloquial terms also known as the financing of public debt via the money printing press,' Weidmann, who heads Germany's Bundesbank, said in a speech... The prohibition of monetary financing in the euro area 'is one of the most important achievements in central banking' and 'specifically for Germany, it is also a key lesson from the experience of hyperinflation after World War I,' he said... Such a course 'undermines the incentives for sound public finances, creates appetite for ever more of that sweet poison and harms the credibility of the central bank in its quest for price stability,' Weidmann said.

Weidmann welcomed the German government's opposition to using the central bank's gold and currency reserves to bolster Europe's 440 billion euro rescue fund, the European Financial Stability Facility. 'I am glad that also the German government echoed our resistance to the use of German currency or gold reserves in funding financial assistance to other' euro-area members, he said. 'Proposals to involve the Eurosystem in leveraging the EFSF -- be it through a refinancing of the EFSF by the central bank or most recently via the use of currency reserves as collateral for a special purpose vehicle buying government bonds -- would be a clear violation of this prohibition' on monetary financing."

04 November 2011

The rich tend to be even bigger anti-capitalists than the poor. As soon as they get some wealth they try to put the brakes on. They set up tests and hurdles…designed to keep the hoi polloi off their tennis courts and out of their businesses. They use every means possible to separate themselves from the masses – language, education, dress, customs, geography. They tend to speak differently…sometimes even using a completely different language. Probably the most recent and best known example comes from Britain, where the upper classes still speak a heavily Latinized version of English, called “RP” for ‘received pronunciation,’ while the lower classes speak a more Germanic, more archaic version. A thousand years earlier, the upper classes actually spoke a different language all together – French.

In France itself, the development of “French” was itself a long process; until the 19th century the language was foreign to most people who lived in France. It, and Latin before it, was used almost exclusively by the rich, the powerful, and the well-educated.

General Theory of Zombieism:

All (or almost all) people want wealth, power and status.

They want to get it in the easiest way possible.

The easiest way to get wealth is to steal it, which is why all groups turn to the government, the only institution which gets to steal lawfully.

Over time, more and more groups are able to use the system for their own ends.

If they are poor, they implore the government to “tax the rich” and give the money to the poor.

If they are rich, they want the government to protect their wealth and status – with every means available to them.

Democratic governments generally do both. They support the poor with loud attacks on the rich combined with whimpers of money (for the poor can generally be bought – vote for vote – much cheaper than the rich).

As for the rich, their support is more subtle and underhanded. There are tax credits and loopholes for anyone who can afford them; sugar-laden contracts for the insiders and plenty of jobs for well-credentialized blowhards.

The rich complain about the poor. The poor complain about the rich. Both complain about the government. And everybody hates capitalism

Most people do not have strange ailments. They have the problems that most people have. Those are the ailments that a person with modest training could recognize and treat with simple procedures and cheap generic drugs. Aided by electronic tools…and perhaps a few good doctors in India, connected by Skype…you could probably get as good advice as you could get anywhere. Maybe better.

Why won’t that work? It’s against the law! The feds reward their protected industries with almost boundless wealth. You can’t practice medicine without a license. And you wouldn’t be re-imbursed by insurance programs…and certainly not covered by Medicare or Medicaid. And even though your clients had specifically agreed not to sue, you’d be pursued by every shyster lawyer in the country.

Health care is a protected industry…it squanders at least $2,500 per person per year. That’s the equivalent of the entire Pentagon budget…or nearly half the entire 2011 deficit. It’s spent on unnecessary and ineffective tests and treatments – not to mention a mountain of patent medicines. And these costs do not include all the indirect costs of lawyers and court time, caused by the medical malpractice industry.

03 November 2011

In the real world, however, far more injustice, violence, torture, theft, and outright murder has been committed IN THE NAME of “law enforcement,” than has been committed in spite of it. If you disagree, try watching a documentary or two about some of the atrocities committed by the regimes of Stalin, or Lenin, or Chairman Mao, or Hitler, or Pol Pot, or any number of other tyrants in history. Pause the film when the jackboots are about to herd innocent people into cattle cars, or gun them down as they stand on the edge of a ditch, and THEN ask yourself the question, “When should you shoot a cop?”

Keep in mind, the evils of those regimes were committed in the name of “law enforcement.” And as much as the statement may make people cringe, the history of the human race would have been a lot LESS gruesome if there had been a lot MORE “cop-killers” around to deal with the state mercenaries of those regimes.

Most people have a hard time viewing their OWN “country,” their OWN “government,” and their OWN “law enforcers,” in any sort of objective way. Having been trained to believe that obedience is a virtue, the idea of forcibly resisting “law enforcement” is simply unthinkable to many. And humanity has suffered horribly because of it. People want to believe that ”the system” will, sooner or later, provide justice. But history shows all too well that those who fight for freedom and justice almost always do so “illegally”–i.e., without the permission of the ruling class.

Cops have the attitude that, as long as it’s called “law,” they will enforce it, what is there to prevent complete tyranny? Not the consciences of the “law-makers” or their hired thugs, obviously. When tyrants define what counts as “law,” then by definition it is up to the “law-breakers” to combat tyranny.

If it’s wrong for cops to violate your rights, doesn’t that imply that the people have a right to RESIST such actions? If you question their right to detain you, interrogate you, search you, invade your home, and so on, you are very likely to be tasered, physically assaulted, kidnapped, put in a cage, or shot. You will usually have only two options: submit, or kill the cop. You can’t resist a cop ”just a little” and get away with it. He will always call in more of his fellow gang members, until you are subdued or dead. Politely asking fascists to not be fascists has a very poor track record.

This is what movements like Maoists in India have opted for - a rejection of the State's monopoly on power.

30 October 2011

A wave of social upheaval is shaking the world. In the West, the press has called the protesters "the outraged." The name is taken from the pamphlet Time for Outrage! (Indignez-vous!) by French intellectual Stéphane Hessel. Hessel has sold millions of copies of his brief and provocative pamphlet, triggering social movements in France and Spain.

Outraged by Corruption

Hessel's call for "a rational economic order in which the individual interest is subordinated to the general interest" perfectly summarizes the collectivist attitude. Once this collectivist idea is accepted there is no limit to government intervention. From then on, government can force individuals to follow predetermined courses of action, which are not their own, under the pretext of serving the common good, thereby undermining freedom and progress.

Is there any reason to believe that government really cares about the common good?

Are bureaucrats and politicians not people like everyone else?

Doesn't power corrupt, and absolute power corrupt absolutely?

Is it reasonable to think that those who are in power — and therefore already corrupted — would put their own interest aside in order to serve an abstract ideal called the "common good"?

Even as Hessel denounces that lobbyists have overtaken government in "the highest spheres," he seems to believe that if government were to have more control over industries, corruption would not do its harmful work. In other words, for Hessel, if politicians and bureaucrats had more power than they currently have, the system would be less corrupt. History, however, shows that the more power there is in the hands of the rulers the more corrupt the system becomes.

The greatest failure of socialism was that it created a class system more violent and rigid than anything the Western world had ever seen.

Ideal Worlds - The tragedy of Good Intentions

What would happen if political leaders were not corruptible? Would Hessel's idea work then?

Is the purity of intentions a guarantee for the quality of the results of someone's actions? Would morally superior and powerful men know better than we do what is best for us? And more importantly, would we be willing to accept honest men forcing us to do what they think is best?

Hessel's argument rests on a falsehood:the idea that the common good or the general interest is something different from the sum of all individual interests, and that government is a separate entity that through coercion can elevate society to a higher degree of moral perfection and happiness. Few ideas in history have proved to be more appealing and at the same time more destructive than this one.

The greatest evils are usually not the result of bad men trying to harm others but of good men trying to help others they do not even know.

The Paradox of the Outraged

Honest left-wing intellectuals who encourage movements such as Occupy Wall Street are outraged to a large extent by the creature of their own thinking.The myth of the welfare state has led to an explosion of welfare transfers and an equal explosion of the people's expectations with regard to their so-called social rights. Self-reliance was progressively replaced by a mentality of rights with no duties. As a result, a gigantic disconnect arose between what people are willing to pay in taxes and what they expect in return in the form of government benefits.

Because promising welfare is the easiest way to win elections, politicians kept expanding the size of government over the decades. And because the public would not have tolerated an honest increase in taxes to finance the new welfare programs, governments started borrowing the money necessary to finance them. Now it's time to pay for the party. Inevitably, this means a dramatic reduction in our standard of living.

People do not understand that the source of the crisis was government they now go on the streets demanding even more of what caused the problem in the first place: government. That is the paradox of the outraged.

What about the Corrupt Bankers?

Our banks are incentivised to "socialise losses and privatise profits" by the central bank — a government-created agency of monetary central planning. Central banks provide private banks with liquidity, allowing them to expand the money supply in a coordinated fashion, thereby creating financial and real-estate bubbles. Banks speculate with money given at artificially low interest rates by the central bank.

The dramatic rise in the price of raw materials and agricultural commodities is basically the result of the inflation created by central banks. The most perverse consequence of this government-induced inflationary process is that it redistributes wealth from the middle class and the poor to the rich financial elites and governments, for whom inflation works as a hidden tax.

Those who declare themselves outraged by the unequal distribution of wealth should pay more attention to government-created inflation, for this is by far one of its central causes and the origin of the "money power" they condemn.

Economic Liberty is the Answer

High taxes and excessive regulation hinder productivity and destroy incentives for job creation and competition. Rich people can escape the immediate effects of taxes by taking their money and investing it abroad. The middle class and the poor have to suffer the consequences of fewer jobs, less income, and a lower quality of life.

Economic liberty includes solid property rights and freedom from taxation is thus a necessary condition for improving the very quality of life of the masses. It is no coincidence that poor people in the ten countries with more economic liberty have an average income ten times higher than the income of poor people in the ten countries with the lowest degree of economic liberty.

Inflation and the lack of economic liberty are central causes of poverty and inequality. Hessel does not know this, declaring himself outraged by inequality in general. Firstly, there is a reason to be outraged only when inequality is the result of arbitrary confiscation, fraud of any sort, or bad economic policy. Secondly, when inequality is the result of freedom, there is no reason to be outraged at all, especially when everyone has enough. Only envious people can be outraged by the wealth some have legitimately gained.

What the people who claim to seek "social justice" fail to understand is that those who have become rich by honest means have served society more than any one else.

Hessel is right when he says that outrage is necessary for action and resistance. However, it is important to understand the real reasons on which the outrage should be grounded. If people get outraged for the wrong reasons, they will inevitably demand the wrong solutions, making the problem worse.

Hessel has done his best, yet the ideology he is promoting, rooted in old collectivist attitudes, can only lead to more serious trouble. He is right to denounce a situation that is indeed outrageous and unsustainable, but he is wrong about everything else.

Adapted from: A wave of social upheaval is shaking the world. In the West, the press has called the protesters "the outraged." The name is taken from the pamphlet Time for Outrage! (Indignez-vous!) by French intellectual Stéphane Hessel. Hessel has sold millions of copies of his brief and provocative pamphlet, triggering social movements in France and Spain.

Outraged by Corruption

Hessel's call for "a rational economic order in which the individual interest is subordinated to the general interest" perfectly summarizes the collectivist attitude. Once this collectivist idea is accepted there is no limit to government intervention. From then on, government can force individuals to follow predetermined courses of action, which are not their own, under the pretext of serving the common good, thereby undermining freedom and progress.

Is there any reason to believe that government really cares about the common good?

Are bureaucrats and politicians not people like everyone else?

Doesn't power corrupt, and absolute power corrupt absolutely?

Is it reasonable to think that those who are in power — and therefore already corrupted — would put their own interest aside in order to serve an abstract ideal called the "common good"?

Even as Hessel denounces that lobbyists have overtaken government in "the highest spheres," he seems to believe that if government were to have more control over industries, corruption would not do its harmful work. In other words, for Hessel, if politicians and bureaucrats had more power than they currently have, the system would be less corrupt. History, however, shows that the more power there is in the hands of the rulers the more corrupt the system becomes.

The greatest failure of socialism was that it created a class system more violent and rigid than anything the Western world had ever seen.

Ideal Worlds - The tragedy of Good Intentions

What would happen if political leaders were not corruptible? Would Hessel's idea work then?

Is the purity of intentions a guarantee for the quality of the results of someone's actions? Would morally superior and powerful men know better than we do what is best for us? And more importantly, would we be willing to accept honest men forcing us to do what they think is best?

Hessel's argument rests on a falsehood:the idea that the common good or the general interest is something different from the sum of all individual interests, and that government is a separate entity that through coercion can elevate society to a higher degree of moral perfection and happiness. Few ideas in history have proved to be more appealing and at the same time more destructive than this one.

The greatest evils are usually not the result of bad men trying to harm others but of good men trying to help others they do not even know.

The Paradox of the Outraged

Honest left-wing intellectuals who encourage movements such as Occupy Wall Street are outraged to a large extent by the creature of their own thinking.The myth of the welfare state has led to an explosion of welfare transfers and an equal explosion of the people's expectations with regard to their so-called social rights. Self-reliance was progressively replaced by a mentality of rights with no duties. As a result, a gigantic disconnect arose between what people are willing to pay in taxes and what they expect in return in the form of government benefits.

Because promising welfare is the easiest way to win elections, politicians kept expanding the size of government over the decades. And because the public would not have tolerated an honest increase in taxes to finance the new welfare programs, governments started borrowing the money necessary to finance them. Now it's time to pay for the party. Inevitably, this means a dramatic reduction in our standard of living.

People do not understand that the source of the crisis was government they now go on the streets demanding even more of what caused the problem in the first place: government. That is the paradox of the outraged.

What about the Corrupt Bankers?

Our banks are incentivised to "socialise losses and privatise profits" by the central bank — a government-created agency of monetary central planning. Central banks provide private banks with liquidity, allowing them to expand the money supply in a coordinated fashion, thereby creating financial and real-estate bubbles. Banks speculate with money given at artificially low interest rates by the central bank.

The dramatic rise in the price of raw materials and agricultural commodities is basically the result of the inflation created by central banks. The most perverse consequence of this government-induced inflationary process is that it redistributes wealth from the middle class and the poor to the rich financial elites and governments, for whom inflation works as a hidden tax.

Those who declare themselves outraged by the unequal distribution of wealth should pay more attention to government-created inflation, for this is by far one of its central causes and the origin of the "money power" they condemn.

Economic Liberty is the Answer

High taxes and excessive regulation hinder productivity and destroy incentives for job creation and competition. Rich people can escape the immediate effects of taxes by taking their money and investing it abroad. The middle class and the poor have to suffer the consequences of fewer jobs, less income, and a lower quality of life.

Economic liberty includes solid property rights and freedom from taxation is thus a necessary condition for improving the very quality of life of the masses. It is no coincidence that poor people in the ten countries with more economic liberty have an average income ten times higher than the income of poor people in the ten countries with the lowest degree of economic liberty.

Inflation and the lack of economic liberty are central causes of poverty and inequality. Hessel does not know this, declaring himself outraged by inequality in general. Firstly, there is a reason to be outraged only when inequality is the result of arbitrary confiscation, fraud of any sort, or bad economic policy. Secondly, when inequality is the result of freedom, there is no reason to be outraged at all, especially when everyone has enough. Only envious people can be outraged by the wealth some have legitimately gained.

What the people who claim to seek "social justice" fail to understand is that those who have become rich by honest means have served society more than any one else.

Hessel is right when he says that outrage is necessary for action and resistance. However, it is important to understand the real reasons on which the outrage should be grounded. If people get outraged for the wrong reasons, they will inevitably demand the wrong solutions, making the problem worse.

Hessel has done his best, yet the ideology he is promoting, rooted in old collectivist attitudes, can only lead to more serious trouble. He is right to denounce a situation that is indeed outrageous and unsustainable, but he is wrong about everything else.